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Expert commentary and analysis of terror financing issues.
Updated: 2 hours 42 min ago

How ISIS is funded

Sun, 08/10/2014 - 12:57

In 2007, the Islamic State of Iraq was seen as “the richest of the insurgency groups” in Iraq with $1 billion to 1.5 billion “collected in revenue by the group through foreign donations, enforced taxation and confiscation of the property and funds of Iraqis.” But the U.S. surge and ISI missteps significantly damaged the jihadist group’s ability to raise funds.

Seven years and three names later, ISIS amassed a $2 billion comeback and took control of large swathes of territory in northern Iraq including Mosul and 35 percent of Syria.

ISIS’s financial recovery has been marked by a slight shift away from reliance on local extortion networks (although those are still in effect), improved organizational and financial management by ISIS leader and self-proclaimed caliph Abu Bakr al-Baghdadi, and the departure of U.S. troops in 2011.

The most important elements of ISIS’s funding are sadaqa (voluntary donations) from Arab donors in the Gulf; sales and tolls collected on sales of oil from fields under its control; and increasingly through money made by controlling key infrastructure.

Here’s a rundown of ISIS’s main funding channels:

Sadaqa from private donors:

Fundraising is aided by contemporary marketing methods:

Oil:

  • ISIS controls 60 percent of Syrian oil including the lucrative Omar field
  • In Iraq, ISIS controls Butmah and Ain Zalah oil fields, the refinery in Baiji, and oil and gas resources in Ajeel in northern Iraq
  • ISIS sells or collects a portion on black market sales to Turkey, Iran, and in Syria itself
  • Revenue estimates for ISIS range from $1 million to $3 million daily

Dams:

  • In addition to oil, control of key infrastructure such as the dams in Mosul, Fallujah, and Tabqa present increasingly significant revenue potential for ISIS.
  • Professor Ariel Ahram notes this is already occurring at Tabqa, where ISIS is involved in selling electricity.
  • New York Times reporter Tim Arango says that possession of the Mosul dam can enable ISIS to “use it as a method of finance” through extortion schemes to continue their operations.

Other sources:

  • Isis has seized arms from Iraqi depots, including U.S. weapons given to Iraqi forces, plus weapons smuggled from Turkey and Croatia
  • The collection of ransom money has sustained ISIS throughout its existence
  • Antiquities smuggling

Incidently, little is being done by the Gulf states to curtail the flow of donations to ISIS because they either want an independent Sunni state carved out of Iraq or to replace Iraq’s Shia-led government with Sunnis. Washington should designate Saudi Arabia and Qatar as state sponsors of terrorism, but it won’t because of diplomatic considerations.

Without interdicting the donations and the contraband oil, U.S. airstrikes will have limited effect on ISIS’s coffers.

Nunn’s validation of Islamic Relief USA reveals system-wide failure

Tue, 07/29/2014 - 18:42

While she ran the Points of Light Foundation, U.S. Senate candidate Michelle Nunn (D-Ga.), authorized MissionFish, a Points of Light donation processor, to pass contributions from eBay customers to charities of their choice, including Islamic Relief USA (IR-USA). The Nunn campaign refers to this authorization as “validation;” in other words, Points of Light had researched the charity and validated it for inclusion on MissionFish’s list of eligible charities.

The Nunn campaign argues that $33,000 donated by eBay shoppers passed through Points of Light to IR-USA does not constitute a donation by Points of Light to IR-USA. That is disingenuous because what actually happened is that Points of Light received these ear-marked donations and then cut a check themselves to IR-USA. Points of Light benefits from the transaction because it increases the appearance of their overall charitable volume. The eBay customers would not have been able to donate funds to IR-USA while completing their purchases online if MissionFish had excluded the organization on their menu of options.

IR-USA donates millions of dollars each year to Islamic Relief Worldwide, a UK-based organization that has been banned by Israel for aiding Hamas, and whose leadership is linked to the Muslim Brotherhood. A Department of Justice official has implicated IR-USA for being a conduit for the flow of money from America to terrorist groups abroad. Russian intelligence indicates that IR-USA funds militants in the North Caucasus—the region where the family of the Boston marathon bombers originate. Nunn and Points of Light could have discovered several of the red flags about IR-USA, many of which had already cropped up before validation occurred, by conducting due diligence research or even a basic Internet search.

Unfortunately, Points of Light isn’t the first organization to legitimize IR-USA. IR-USA work has been acknowledged by Hillary Clinton’s State Department, the Obamas, the U.S. Department of Agriculture, and it maintains 501(c)(3) status with the IRS.

These politicians and agencies have been willing to overlook questionable practices by IR-USA because of their eagerness to demonstrate cooperation with Muslim Americans and Islamic charitable sector. The embrace of IR-USA was exacerbated by IR-USA’s fraudulent representation of itself as a larger charity than it actually was by hyper-inflating the valuation of their deworming drug stockpiles. Although the value of deworming drugs may sound like a technical, minor point, it is not. IR-USA basically perpetrated a fraud for several years by overstating the value of the drugs which made up 75 percent of their assets. Bigger institutions like USDA and Points of Light are likelier to partner with bigger charities, which IR-USA seemed to be. If IR-USA had reported a truthful value of its donations and assets, it may not have been viewed as a big enough charity to attract institutional partners like these.

A major charitable bundler like Points of Light had the resources to discover the disturbing truths about IR-USA’s connections to Hamas and its fraudulent financial statements prior to validation. It’s time that federal agencies and institutional donors started paying less attention to warm-and-fuzzy statements by politicians about what a great partner a certain charity is, and pay more attention to the results of basic due diligence research. Until then, and until there are changes at the highest levels of the IRS and the Department of Justice, and a willingness to confront IR-USA for its history of misrepresentations, we will probably see decisions like Nunn’s repeated again.

Al Qaeda financiers use Qatar for international activities

Sat, 06/28/2014 - 14:16

In addition to institutional and charitable support by Qatar, Al Qaeda and its offshoots (including jihadists in Syria and Iraq) receive substantial financial support from private Qatari donors and bundlers. Here’s a quick who’s who:

Abd al-Rahman al-Nuaymi

Abd al-Rahman al-Nuaymi:  The U.S. Treasury Department describes al-Nuaymi as “a Qatar-based terrorist financier and facilitator who has provided money and material support and conveyed communications to al-Qa'ida and its affiliates in Syria, Iraq, Somalia and Yemen for more than a decade. He was considered among the most prominent Qatar-based supporters of Iraqi Sunni extremists.” Al-Nuaymi transferred $600K to Al Qaeda in Syria in 2013, and sent $2 million monthly to Al Qaeda in Iraq for an undisclosed period of time. He is also described as an interlocutor between Qatari nationals and Al Qaeda in Iraq leaders.

Salim Hasan Khalifa Rashid al-Kuwari:  Treasury says al-Kuwari “provides financial and logistical support to al-Qa’ida, primarily through al-Qa’ida facilitators in Iran. Based in Qatar, Kuwari has provided hundreds of thousands of dollars in financial support to al-Qa’ida and has provided funding for al-Qa’ida operations, as well as to secure the release of al-Qa’ida detainees in Iran and elsewhere.”

Abdallah Ghanim Mafuz Muslim al-Khawar:  According to U.S. officials, “Al-Khawar has worked with Kuwari to deliver money, messages and other material support to al-Qa’ida elements in Iran. Like Kuwari, Khawar is based in Qatar and has helped to facilitate travel for extremists interested in traveling to Afghanistan for jihad.

Khalifa Muhammad Turki al-Subaiy:  The UN describes al-Subaiy as “a Qatar-based terrorist financier and facilitator who has provided financial support to, and acted on behalf of, the senior leadership of Al-Qaida (QE.A.4.01). He provided assistance to senior Al-Qaida leader Khalid Sheikh Mohammed prior to Sheikh Mohammed’s capture in March 2003. Since that time, he has provided financial support to Al-Qaida senior leadership in South Asia.” Al-Subaiy served a brief prison sentence in 2008 before being released by Qatar.

Yusuf Qaradawi:  The Egyptian-born, Qatar-based spiritual father of the international Muslim Brotherhood sits atop a massive terrorist funding network including the “Union of Good” umbrella network of charities that funds Hamas. Qaradawi was also a sharia adviser for Al Taqwa which provided banking services to Al Qaeda.

Clipping the Wings of Lashkar-e Taiba and its Charity Front Jamaat-ud Dawa of Pakistan

Fri, 06/27/2014 - 12:34

Animesh Roul

In an attempt to clip Pakistan’s terror charity Jamaat ud Dawa’s (JuD) financial wings further, the U.S. Department of the Treasury on 25 June (2014) has once again targeted the leadership and financial networks of the organization. The JuD (formerly Markaz Dawat-ul-Irshad-MDI) which is a social charily front for the deadly Jihad group Lashkar-e-Taiba (LeT) has been operating with impunity inside Pakistan since its inception. The group was founded by Hafiz Muhammad Saeed, the present chief of JuD and all its franchises and Zafar Iqbal in Afghanistan’s Kunar province in 1987 under the active guidance of Abdullah Azzam, the Palestinian Islamic ideologue who mentored Osama bin Laden. LeT has its headquarters in Muridke (Moreedkey) town, located near Lahore, Pakistan and operates training camps in Pakistan administered Kashmir and some parts of Punjab province and presently expanded into Sind and Balochistan provinces of Pakistan and Bordering areas of neighboring Afghanistan.

LeT has perpetrated numerous terrorist attacks against India including the November 2008 Mumbai serial attacks. The group aims to establish Nizam-e-Mustafa (God’s government) in the world and merger of Muslim majority Jammu & Kashmir (J&K) state with Pakistan. It has called for holy war against the United States, India and Israel. With active support from Pakistan’s external intelligence agency ISI, the Lashkar-e Taiba furthers its anti India objectives introducing suicide missions in Jammu and Kashmir and into the heartlands of India over the years. The JuD/LeT combine often compared with the al Qaeda for its lethality and sometimes with Hezbollah and Hamas, for its militancy-cum-charity activities. Most recently Jamaat Ud Dawa morphed into a political pressure group in Pakistan.

With active and sustained State patronage and to become legitimate in the eyes of international community, Hafiz Saeed and his cohorts have branched out to charitable works during natural calamities. Religious activism remains its focal point. The JuD/ LeT runs many Islamic centers, schools and religious seminaries, a network of hospitals, orphanages, charity centers along with thousands of administrative and fund collection centers across Pakistan. After a brief government crackdown under international pressure, the JuD has reorganized itself under many umbrella conglomerates e.g. the Tehrik-e-Hurmat-e-Rasool (THR-Movement for Defending the Honor of the Prophet), Tehrik-e-Tahafuz Qibla Awal (TTQA) and Al-Anfal Trust. To evade government proscription and international scrutiny, JuD established many charity fronts e.g. Idara Khidmat-e-Khalq (IKK) and Falah-e-Insaniyat Foundation (FIF). Rightly observed that Lashkar e Taiba /JuD combine has successfully blended militancy with charity works in Pakistan and neighborhoods (e.g. Maldives/Lanka) through many shadow originations to dodge crackdown and international scrutiny.

So far, US Treasury and the Department of State have designated 22 individuals and four entities associated with Lashkar-e Taiba and JuD.

The US government for the first time included LeT in the Terrorist Exclusion List on December 5, 2001 and designated as a FTO (Foreign Terrorist Organization) on December 26, 2001. In April 2006, The US State Department added Jamaat-ud-Dawa (JUD) and IKK as aliases of Lashkar- e- Taiba under the executive order 13224, which blocked all property, and interests in property of JUD and IKK that are in the United States, or come within the United States, or the under the control of U.S. persons. In May 2008, the US state department has imposed sanctions (including freezing of assets) of four senior ideologues and financier of JuD/LeT including of Hafiz Saeed, Zaki-ur-Rehman Lakhvi, Haji Muhammad Ashraf and Mahmoud Ahmed Bahaziq. In November 2010, the US designated Falah-e-Insaniyat Foundation and couple of leaders associated with the foundation, Hafiz Abdur Rauf, Mian Abdullah and Mohammad Naushad Alam Khan, to its list of specially designated global terrorists (SDGT).

Again on September 2011, the U.S. Treasury designated two more LeT/JuD leaders, Zafar Iqbal and Hafiz Abdul Salam Bhuttavi.

In Late August 2012, the US Treasury designated another eight LeT/JuD leaders including Abdullah Muntazir, Ahmed Yaqub, Sajid Mir, Hafiz Khalid Walid, Qari Muhammad Yaqoob Sheikh and Talha Saeed.

On June 25 (2014) the department again designated Nazir Ahmad Chaudhry and Muhammad Hussein Gill as Specially Designated Global Terrorists.

LeT is listed as banned organization in India, Pakistan, US, Canada, the United Kingdom, the European Union, Russia and Australia. The United Nations Security Council has already imposed sanctions on Jamaat-ud-Dawa and has declared it as a front group for the LeT. Despite the Pakistan government’s proscription, Jamaat-ud-Dawa (JuD) has stepped up its overt anti-Indian and anti-Western rhetoric and operates freely holding mass rallies across Pakistan as its leaders continue to give provocative speeches in various public forums to fuel Jihadi sentiments and threaten Indian and Western interests in the region.

How far these restrictions will hamper JuD/LeT’s operations would remain to see. There would be very minimal impact inside Pakistan as the group uses various informal channels to raise funds and it runs under State patronage. It raises funds during public gatherings in Pakistan mostly from wealthy individuals and inspired people for the cause of Kashmir and Islam. The latest sanctions and designations would delegitimize the causes. Even though US impositions of such financial actions will not make much difference immediately to JuD or its various franchises inside Pakistan, it will certainly make things difficult for them in the long run to operate at the international sphere raising funds and logistics through formal channels, especially the donations come in the name of humanitarian and educational charity. Also, large amount of donations from the Pakistani Diaspora overseas would be restricted. And last but not the least the restrictions will jeopardize their movement (Travel) aboard especially in the Middle Eastern countries, considered a hub for Islamic charities.

[Animesh Roul, Executive Direcctor, Society for the Study of Peace and Conflict, New Delhi.]

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